Stocks fell as new tariffs on South Korea, Japan, and more countries added to renewed trade uncertainty. The White House left the door open for negotiations
Celal Gunes/Anadolu via Getty Images
President Donald Trump said Monday that South Korea and Japan would fall subject to 25% tariffs starting August 1, unilaterally informing them of the new levies in letters that he posted on social media as a self-imposed July 9 trade deadline neared. Other nations also received letters detailing new import taxes on their products.
The Trump administration had signaled in recent days that trade partners would receive official letters assigning them tariff rates if they wanted to retain access to U.S. markets. South Korea and Japan were first up on the list.
“We invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far,” Trump wrote.
“We will charge Japan of only 25% on any and all Japanese products sent to the United States, separate from the sectoral tariffs,” the letter to Japanese Prime Minister Ishiba Shigeru stated. Sectoral tariffs refer to separate import taxes that Trump has imposed on steel, aluminum, and autos. Identical language appeared in a letter addressed to South Korean President Lee Jae-Myung.
Trump posted more letters through the afternoon on Truth Social, his social media site. He threatened to pursue steep tariffs on Malaysia, Kazakhstan, South Africa, Laos, and Myanmar on a similar Aug. 1 timeline.
Stocks fell as the announcements added to renewed trade war uncertainty that started over the weekend, with Trump leveling threats against countries in the BRICS bloc — a group of emerging economies spearheaded by Brazil, Russia, India, China, and South Africa.
The Dow Jones Industrial Average shed 422 points on Monday, or about 1%. The S&P 500 and the Nasdaq $NDAQ both dropped about 1%. Still, stocks remain close to record highs despite the amplified uncertainty around trade.
After financial markets closed, Trump posted other letters carrying threats of punitive tariffs on Bosnia, Thailand, Cambodia, Serbia, Bangladesh, Indonesia, and Tunisia. Most aligned closely with the original reciprocal tariff rates announced in early April, ranging from 25% to 40% on trade partners.
Despite the flurry of letters, nothing appeared to be set in stone. Trump left the door open for countries to negotiate their way out of the tariffs. “These tariffs may be modified, upward or downward, depending on our relationship with your country,” the president's letters said.
South Korea already has a free trade agreement with the U.S. that was first signed by then-President George W. Bush and later implemented under the Obama administration. Trump signed an agreement modestly updating trading arrangements with South Korea — and Japan, as well — during his first term.
The letters amount to an acknowledgement that the reciprocal tariffs won't snap back for trading partners until August at the earliest. Trump’s first attempt at reciprocal tariffs, which he proclaimed "Liberation Day," lasted a week, and the White House paused them a week later and resorted to negotiations that have yielded limited progress so far.
White House Press Secretary Karoline Leavitt said scores of foreign leaders are set to receive letters from Trump detailing future tariffs. Dozens more will reportedly go out in the coming days and weeks.
“We’ve seen a lot of positive developments in the right direction, but the administration, the president, and his trade team want to cut the best deals for the American people and the American worker,” Leavitt said at a Monday press briefing.
Scott Lincicome, a trade expert at the libertarian-leaning Cato Institute, wrote on X $TWTR that there was “no incentive” for South Korea or other countries to negotiate trade deals if it can be undone at Trump's whim. For BRICS, Trump might attempt to divide and conquer.
"This tariff threat is likely meant to drive a wedge within BRICS," said Jacob Jensen, a trade expert at the American Action Forum. "Countries like India might lean towards the United States and try to push away from the BRICS organization, while countries like China, who are the leading members of BRICS, will probably say, 'All right, we'll accept the 10%.'"
Jensen estimated that going ahead with a 10% tariff on BRICS and 12 aligned countries would add $50 billion in annual costs to U.S. businesses and consumers.
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